Judge Forced To Excuse Foreigners In Gulf Suit

Trustees of the remnants of Gulf USA Corp. have suffered a setback in their lawsuits against former officers of the company.

Judge Alfred Hagan excused about half of the officers named in the suit because Idaho law would not apply. Most of the defendants dismissed are foreigners who had little business in the United States.

The Gulf trustees are suing the former heads and directors of Gulf for squandering the company’s millions away in bad investments. Gulf, once flush with more than $170 million in assets, went broke in 1993.

Those millions could have helped clean up the Bunker Hill Superfund site in the Silver Valley and helped maintain medical benefits for thousands of Bunker Hill pensioners who live in the Inland Northwest.

As a result of the bankruptcy, pensioners have taken cuts in their medical benefits.

The Environmental Protection Agency was left with $17 million to use primarily for Superfund cleanup. The total Bunker Hill cleanup bill will top $100 million, with taxpayers making up much of the difference.

Gulf bondholders who got pennies on every dollar invested in Gulf stand to gain if the trustees collect more money.

The lawsuit aims to prove wrongdoing by two sets of directors. The first group, headed by David John Rowland, ran the company from 1989 to 1991.

The second group, led by Graham F. Lacey, ran Gulf from 1991 to 1993.

In Idaho District Court, Judge Hagan removed Lacey, a Swiss bank and this second group of Gulf directors from the suit because Idaho lacks jurisdiction over them.

Rowland and the directors remain defendants, and Gulf’s lawyers say Rowland remains their main target.

“We’ve lost some people, but the core group remains in the suit,” said Diane Coffino of Dewey Ballantine. “They’re the really bad ones we’re after.”

The suit accuses Rowland of bleeding cash from Gulf through speculative acquisitions and investments. Rowland bought millions in New Zealand real estate that quickly lost value, according to the suit.

The suit aims to collect damages from an officer liability insurance fund taken out to cover these kinds of suits.

Lacey’s dismissal from the suit removes another potential source of money, but there still could be millions of dollars in damages to come from Rowland and the other directors during his tenure, she said.

Efforts to reach Boise attorney Scott Hess, Lacey’s counsel in Idaho, were not successful.

The case likely will be heard in Boise, despite efforts of several defendants to change the venue of the trial, Hagan’s Sept. 29 ruling states.

The suit will take from 18 months to three years to resolve unless Rowland and others try to settle, Coffino said.

, DataTimes MEMO: Idaho headline: Judge excuses foreigners in Gulf suit